I’ve spent the last 15 years in the tech startup community including several early stage ventures with successful exits in the healthcare space. I'm also a Top Writer on Quora (2012 and 2013) for several healthcare specific topics. I'm likely to include film references and quotes as in "All of life's riddles are answered in the movies." Twitter handle is: @danmunro

Last Friday, Eric Shinseki resigned his post as Secretary of Veterans Affairs. The sequence of events are fairly well documented, but the resignation itself came within days of an “Interim Report” by the VA Office of Inspector General over allegations of corruption and poor care delivery – specifically at the Phoenix Health Care System. The Interim Report had this paragraph in the Executive Summary:

The issues identified in current allegations are not new. Since 2005, the VA Office of Inspector General (OIG) has issued 18 reports that identified, at both the national and local levels, deficiencies in scheduling resulting in lengthy waiting times and the negative impact on patient care. As required by the Inspector General Act of 1978, each of the reports listed was issued to the VA Secretary and the Congress and is publicly available on the VA OIG website. Veterans Health Administration – Interim Report (5/28 here)

For those who want a more complete history of scandals and resignations at the VA – CNN has a great timeline (here) dating back to 1930. That’s when the first version of the Veterans Administration (founded in 1921 and called the Veterans Bureau) completely collapsed under a cloud of scandal and corruption. The Veterans Bureau was dismantled and replaced by what is now known as the Veterans Administration.

According to the CNN timeline, Mr. Shinseki is now the 3rd top Veteran’s official to resign. The first was Frank Hines in 1945 and the second was Donald Johnson in 1974. Ron Kovic (“Born on the 4th of July” author) held a 19 day hunger strike at a Federal Building in L.A. as a part of a protest against VA healthcare treatment which led to Mr. Johnson’s resignation.

Clearly, corruption, scandal and resignations at the VA are not new.

Fellow Forbes Contributor (and physician) Paul Hsieh cited three factors underlying the most recent allegations of corruption at the VA (here). Referencing a New York Times article, Dr. Hsieh summarized the three factors as:

1) Doctor Shortage 2) Perverse Incentives 3) Culture of Dishonesty

He’s absolutely right – on all three counts. The New York Times article highlighted the first factor this way:

At the heart of the falsified data in Phoenix, and possibly many other veterans hospitals, is an acute shortage of doctors, particularly primary care ones, to handle a patient population swelled both by aging veterans from the Vietnam War and younger ones who served in Iraq and Afghanistan, according to congressional officials, Veterans Affairs doctors and medical industry experts. Doctor Shortage Is Cited In Delays At V.A. Hospitals – New York Times May 29, 2014

But how is this unique to the VA? It isn’t. This latest scandal in the VA’s storied history is simply another form of “transparency” into an opaque (and patchwork) system known more broadly as US Healthcare, Inc. The VA may well be the focus du-jour of just how flawed our healthcare system is, but much of this has already been evident with the many (through the years) different scandals around pricing, safety and quality.

Last year, the Journal of Patient Safety released their report which suggested the death rate due to preventable medical errors to be (effectively) the 3rd leading cause of death in the U.S.

Thus, the best estimate from combining these 4 studies is 210,000 preventable adverse events per year that contribute to the death of hospitalized patients – based primarily on evidence in hospital medical records found by the GTT method. A New, Evidenced-based Estimate of Patient Harms Associated With Hospital Care– Journal of Patient Safety – September 2013 (here)

While this report was largely around the process of estimating preventable adverse events (PAE’s), it also included this broad, systemic indictment:

At the national level, our country is distinguished for its patchwork of medical care subsystems that can require patients to bounce around in a complex maze of providers as they seek effective and affordable care. Because of increased production demands, providers may be expected to give care in sub-optimal working conditions, with decreased staff, and a shortage of physicians, which leads to fatigue and burnout. It should be no surprise that PAEs that harm patients are frighteningly common in this highly technical, rapidly changing, and poorly integrated industry. The picture is further complicated by a lack of transparency and limited accountability for errors that harm patients.

Relative to wasteful healthcare spending, the global accounting firm of PwC summarized their finding in a 2009 report this way:

Our research found that wasteful spending in the health system has been calculated at up to $1.2 trillion of the $2.2 trillion spent in the United States, more than half of all health spending. PwC Report – The Price of Excess (here)

The VA isn’t an example of what’s wrong with Government run healthcare – it’s a clear indictment of how the whole system (beginning with primary care) in every setting (public and private) has been optimized around revenue and profits – not safety and quality. This one chart helps to explain the current shortage of primary care providers.

Whether it’s the VA or private practice, our “free-market” system allows medical providers to pursue the path of highest earnings as supported, endorsed and encouraged by their industry. With all of the lucrative alternatives, why would the practice of primary care be economically attractive – in any setting? The shortage of primary care physicians creates the exact kind of economic conflict that often results in scandals – both inside and outside the VA.

“It was unethical to put us in that position,” Dr. Phyllis Hollenbeck said of the over-stressed primary care unit at the Veterans Affairs hospital in Jackson, Miss., where she worked. Doctor Shortage Is Cited In Delays At V.A. Hospitals – New York Times May 29, 2014

Mr. Shinseki’s resignation could be a catalyst for additional healthcare reform – both at and beyond the VA – but it likely won’t. The reason could well be attributed to this two sentence quote by a Republican Governor:

How many businesses do you know that want to cut their revenue in half? That’s why the healthcare system won’t change the healthcare system. Rick Scott – Governor of Florida (as quoted by Vinod Khosla) – Rock Health Innovation Summit – August 2012 (video here)

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Dan, to elaborate further, the stats are compelling but another way to solve the problem is for the government to allow vets to sign up for commercial insurance and commit to paying for a fixed threshold of premium cost (so the vet can buy more if they want it) and let the market address vet care – not create a whole seperate government based system that is – as easily identified – not efficient (this characteristic so unstates the real problem). In general government de-regulation and tort reform (achieved in Texas for example), would free physicians from constraints and liabilities for performance and provide a more secure business as well as clinical operations environment. Thanks for the article. RW

I understand the alternative – but don’t agree that it solves anything – especially since it doesn’t solve the issue around primary care (inside or outside the VA). It’s similar to the move by employers to get to a defined contribution model of healthcare coverage (and away from a defined benefit). Everyone is eager to push higher costs onto patients (VA or otherwise). That doesn’t make the care different or better – it’s just another source of revenue to support escalating costs! Tort reform isn’t remotely an issue. Medical malpractice rates have been decelerating – for years!

Compensation is a big issue – because primary care isn’t a career option – specialty care is where the career’s are. Tort reform won’t magically create a primary care career path.

one of the reasons why the VA is so fraught with corruption: Backround:Except for token representation on the Hospital Executive Board (HEB), VA Staff Physicians are not involved in deliberations concerning local discretionary spending. Such deliberations are done by small administrative subcommittees. The recommendations are taken to the HEB for essentially a rubber stamped approval. The Issue: Administrators do not adhere to the same ethical principles as medical care providers. They have no working knowledge of medicine. They have no investment in making sure that each individual patient receives the care necessary to recover from or adequately stabilize their particular constellation of illnesses. The administrators will invariably favor their own pocketbook at the expense of the safety, health, and welfare of employees and patients. Furthermore, they are able to do so with relative impunity and no medical oversight. There is no monitoring for adverse medical & personnel consequences of administrative decisions made by their own local discretionary authority. The Chief of Staff (COS) is not at the top of the chain of command. The COS reports to the non-MD Hospital director. Therefore, no rein exists on those discretionary decisions that favor self aggrandizement at the expense of fair, appropriate, and safe management of the framework in which VA employees labor, and the milieu in which medical care is provided to the VA patients.

Dan — I hope I am agreeable in my disagreement — I object to the argument that a massive failure of a government-run medical system is rationale for more government involvement in the private system.

It seems that you are asserting that the bureaucratic ineptitude and corruption of the government’s VA system is largely due to the shortage of private resources in the free market. And not related to the historical tendency of large government bureaucracies to be inept and corrupt. I submit that this is a curious, counter-intuitive leap, not supported by precedent.

You also assert that the failures in the government’s VA system are not to be construed as issues with a government system, but with the overall healthcare system, public and private. Again, this seems a leap. Certainly, the private system is not perfect, but I can’t think of a thorough systemic failure of a private system that rivals the recent VA scandals, even counting MLK in Los Angeles.

I’ve been to VA hospitals, both to visit patients and as a vendor. My anecdotal experience, admittedly limited, is that these Kafkaesque public facilities bear no resemblance to private hospitals and I can’t understand why so many are pining for more of them.

I do believe that our system – including the VA – has been optimized for revenue and profits – not safety and quality. Primary care is not lucrative when compared to other specialties – and that’s true both inside and outside the VA. The VA has a rich history of being a political football – at the expense of Vets. I am not alone in that assessment.

The underlying problems facing the V.A. are well known in Washington, and they go back at least a decade. As the number of wounded veterans has increased sharply, the agency’s budget hasn’t been raised in line with the increased demand for medical services. That’s why there are such long waiting lines: there are too few doctors and beds available for all the patients that need them.

As with most healthcare shortages in the U.S. – primary care is the first to see the effects of any reduced funding because it’s not considered as critical as other services. General Shinseki took the fall – but that was a political hit and no reflection on his integrity, his ability or his military service. The VA history I cited (courtesy of CNN) shows just how political it is – going all the way back to it’s founding.